The problem with the restaurant boom

Back in the mid-century, manufacturing was the backbone of the American economy. Soon, the restaurant industry may well replace it.

Since the start of the year, the restaurant sector — which includes sit-down establishments, fast food, and bars — produced almost 200,000 new jobs. Only health care came close to matching that growth. Construction and manufacturing were well under 100,000, while government, mining, and retail did even worse. "Restaurant jobs have grown faster than the overall economy every month for the past seven years," Derek Thompson wrote in The Atlantic. And if things continue at this pace, there will be more restaurant workers than manufacturing workers by 2020.

But here's the thing: Manufacturing jobs weren't just plentiful in past decades. They were good jobs, heavily unionized and well-paid. Restaurant jobs generally pay around $12.50 an hour — a measly $26,000 a year. And they're basically not unionized at all.

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The eclipse of manufacturing by restaurants is a microcosm for the brutal class stratification that's overtaken the American economy.

For instance, the fortunes of the restaurant industry track the American economy's overall concentration in U.S. cities. In metro areas like Pittsburgh, D.C., Buffalo, and Cleveland, restaurant work accounted for almost a quarter of all new jobs from 2010 to 2016. In Little Rock and New Orleans, they're a much bigger portion. But outside of major cities, the restaurant industry is struggling.

This means most restaurants are trying to hack it in places where land prices have shot way up. That in turn drives up the cost of rent, the cost of supplies (which have to be bought from other people paying rent), and more. High cost-of-living areas are also high cost-of-doing-business areas. So to stay competitive, restaurants need to find another way to hold their prices down. And the most obvious route is holding down labor costs: i.e. not paying their workers much.

We may eventually reach a day when most restaurant waitstaff have been automated away. Maybe even most kitchen staff. But until that happens, restaurants are stuck being a labor-intensive industry. And labor — even cheap labor — is costly.

But just as important to this story is the restaurant industry's customer base.

In recent decades, that customer base has stratified into a low-wage group (often working in the restaurant industry!) and a high-wage group, with relatively little in between. Restaurants have adapted by doing the same: Cheaper fast food is doing well, as are nicer sit-down restaurants. But the "middle class" of restaurants — causal sit-down joints like Chili's and Applebee's — are having a tough time. The industry has also adapted by jumping on the online ordering and takeout bandwagon: services like UberEATS, GrubHub, and DoorDash are doing brisk business.

Another huge issue for customers is time. Back in the 1950s, a quarter of Americans' spending on food went to restaurants. Today, it's half. And the most likely explanation for that is modern customers just don't have enough time to shop for food or cook.

The amount of time Americans spend at work has fallen far less over the last few decades than for other advanced western economies: Americans still clock in an average of 47 hours a week at work. Keep in mind this failure to reduce work hours happened at the same time that women left the domestic sphere and joined men in the workplace en masse.

The distribution of hours is also weird: Well-paid and well-educated workers actually put in the longest hours. That's how they justify their big salaries to their bosses, who still wield all the power in the workplace. And they need that money to pay their own skyrocketing costs-of-living. Meanwhile, low-paid workers may have more "leisure" time, but it's often leisure time that's forced on them by the lack of jobs. Their schedules are also often capricious and unpredictable, so their jobs are still incredibly destructive to the rest of their lives.

The point is that all these pieces fit together into a coherent story of middle class decline.

The American economy has basically become a giant wealth extraction machine operating on behalf of the top 1 percent. The next class down, the top 10 or 20 percent, has to grind every day to keep up with their rising costs of living. But this daily grind means they don't even have enough time to cook their own meals. Instead, that job is contracted out to an underclass workforce that must be poorly paid so the upper class can afford their services. This has turned modern society into a new version of the relationship between the super rich and their servants in the early 1900s.

And it's not just restaurants.

Child-care workers, for example, are also paid poorly: usually around $21,000 a year. That's both a paltry wage for a worker and a huge expense for a family, even one in the upper class. But the top 10 to 20 percent of families are willing to shoulder it because they have no choice.

Same thing with health care: Jobs in that industry are set to explode, driven largely by the need for nurses and home health-care providers for disabled Americans, and the growing population of the elderly. Like restaurants and child care, this is labor intensive work, and it's unlikely to be automated any time soon. Nor do Americans have the time to care for their disabled or elderly family members themselves. So to make the whole thing fit together, workers like nursing assistants, home health aides, medical assistants, and more are all poorly paid.

There are nationals policies we could pursue to fix all this. We could try to unionize the service sector as a whole, we could pass a federal job guarantee to massively tighten labor markets, or we could just hike the national minimum wage to $15 an hour. All those options would make Americans and the economy as a whole much better off.

But it would also upend the trendy lifestyles and work-life balances of the urban upper class. Suddenly they'd all have to spend a lot more time cooking their own meals, driving their own cars, caring for their own kids, and more. Low pay in the service sector is basically one giant subsidy making those lifestyles possible.

And let's be honest: That's probably one reason why it's so hard politically to get such reforms through.